The 9 Deadly Sins of Innovation

This is part 2 of our Lean Innovation Series.

A startup, whether it is inside a larger organization or on its own, is not a smaller version of a full scale organization. A startup is really an idea in search of a scalable, repeatable and profitable business model. Therefore a full blown business plan is not the place to start. Instead, lean startups begin with a series of business model hypotheses (guesses) that needs to be tested.

Traditional startups generally fail because they commit one or more of these 9 deadly sins as described in The Startup Owner’s Manual by Steve Blank and Bob Dorf:

  1. Assuming “You Know What the Customer Wants” – Come on. We all know what “ass-uming” can make us look like, right? A startup or an innovation team inside a large organization is a “faith based” initiative. To succeed, the startup must quickly find out if the guesses that it is based on are true by getting outside of the office.
  2. The “I Know What Features to Build” Flaw – This sin is sin #1 taken to the second step. Not only do you know what the customers want, but you also know exactly what features they want. If the first assumption is flawed, this is just doubling down on the mistake.
  3. Focus on Launch Date – We all love—and need—deadlines. The problem here is the focus on the launch of a full scale product backed by a full scale organization. The solution is a deadline for getting out of the office with a Minimal Viable Product.
  4. Emphasis on Execution Instead of Hypotheses, Testing, Learning and Iteration – Don’t focus on doing, focus on testing, learning and adapting your product or service to meet the needs of your customers.
  5. Traditional Business Plans Presume No Trial and Error – As the winner of a business plan competition, I know this is true. To win a business plan competition you have to be confident in your assumptions. You can’t get in front of the judges or your potential investors and admit that you aren’t that sure you can sell this thing. In reality, pushing ahead with an untested plan is the worst thing you can do. You must test your assumptions and make changes as quickly as possible.
  6. Confusing Traditional Job Titles with What Needs to be Accomplished – Scrap what you know about traditional job titles. In a startup, the founders do everything. They are the ones meeting customers, testing hypotheses and making changes to the product or service.
  7. Sales and Marketing Execute to a Plan – Traditional business plans make massive assumptions about how the startup will scale. This must be replaced with testing and growth that is “pulled” by the customers you find.
  8. Presumption of Success Leads to Premature Scaling – This is just spending money based on assumptions that you haven’t tested. Use less money, test more and earlier.
  9. Management by Crisis Leads to Death Spiral – Sales aren’t coming in the way you planned, the VP of sales is getting skewered by the board. The VP demands more of the troops and starts making whatever promises he has to in order to increase sales. The product goes off-target and spirals out of control.

Instead of making these mistakes, lean startups understand that failure is an integral part of the search for a scalable, repeatable and profitable business model. Testing is done as early as possible so failure can occur before too much money is spent and while the startup can still afford to make the changes necessary to find the right business model.

Next week, we’ll dive deeper into the Customer Development model; the real starting point for a lean startup.

Photo courtesy of http://headlinesandheroes.com/mens-gifts/culture/seven-deadly-sins-wine/

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